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ERP systems
Selection, implementation and use for supply
of ERP systems for supply chain chain PM
performance management
1159
Helena Forslund
School of Business and Economics, Linnaeus University, Received 2 March 2010
Växjö, Sweden, and Revised 3 June 2010
Accepted 4 June 2010
Patrik Jonsson
Chalmers University of Technology, Gothenburg, Sweden

Abstract
Purpose – The paper aims to explore how supply chain performance management (PM) is affected
by the decisions made in the enterprise resource planning (ERP) system lifecycle phases.
Design/methodology/approach – Data were collected in a multiple case study of four manufacturing
companies.
Findings – Four PM activities and three ERP system lifecycle phases were described and analyzed.
Eight propositions were generated from theory and the case analyses. Detailed demand specifications
could have improved target setting and reporting possibilities, PM education and training seem to be
important in both the implementation and the use phase and supply chain PM is highly affected in the
use phase.
Research limitations/implications – The paper is explorative. A required next step would be to
test the generated propositions on a larger population.
Practical implications – Propositions of what supply chain PM issues manufacturing companies
should consider in the ERP system selection, implementation and use phases are presented. The results
indicate that a lot of supply chain PM improvements can be realized within the use phase of an
existing ERP system.
Originality/value – No previous paper has focused upon how to consider supply chain PM when
implementing ERP systems. This is needed because previous studies have identified ERP systems as
obstacles for supply chain PM.
Keywords Supply chain management, Performance management, Manufacturing resource planning,
Resource management
Paper type Research paper

Introduction
In supply chain management the emphasis is on how well a chain or group of companies
perform in order to create value for the final customer (Brewer and Speh, 2001). There are
several ways of describing the performance in a supply chain. One way of structuring
performance in the supply chain was provided by Krajewski et al. (2007), who
distinguished between inventory measures (such as inventory value, weeks of supply Industrial Management & Data
and inventory turnover), process measures (such as customer satisfaction, on-time Systems
Vol. 110 No. 8, 2010
delivery or lead times) and financial measures (e.g. return on assets or cost of goods sold). pp. 1159-1175
Another way could be found in the SCOR model, which describes supply chains in five q Emerald Group Publishing Limited
0263-5577
dimensions, namely reliability, responsiveness, flexibility, cost and efficiency in asset DOI 10.1108/02635571011077816
IMDS utilization (Stephens, 2001). These attributes are then transformed into defined
110,8 performance metrics such as delivery performance, order fulfilment lead times and
cash-to-cash cycle. Altogether, it can be seen that measuring supply chain performance
is a complex issue, containing many possible metrics that in many cases also are
interrelated (Basu, 2001).
Several studies have revealed obstacles for supply chain performance management
1160 (PM). One major obstacle found is the enterprise resource planning (ERP) systems
(Bourne et al., 2000; Brewer and Speh, 2001; Forslund and Jonsson, 2007, 2009; Phusavat
et al., 2009). An ERP system can be described as a modularized suite of business software
applications that are seamlessly integrated to provide automated interactions and a
common source of data for a firm (APICS, 2007). Knolmayer et al. (2009) found that when
the ERP systems are integrated in a supply chain, the companies should get logistics
performance advantages. Older ERP solutions have been criticized of being inward
looking and hinder supply chain integration (Akkermans et al., 2003). Kelle and Akbulut
(2005) claimed that ERP systems failed to drive buyer-supplier coordination due to poor or
conflicting measurement. Previous studies have pointed out difficulties for a customer to
adapt to several suppliers’ differing definitions of the same metric, and hence capturing,
e.g. on-time delivery in the ERP system in different ways (Hofmann, 2008). They have also
pointed out the fact that many companies have to rely on manual performance data
capturing and report generation due to lacking capabilities in their ERP systems
(Forslund and Jonsson, 2007).
Problems in ERP systems can be caused by the systems themselves or by the way they
are applied (Botta-Genoulaz et al., 2005). Advanced ERP systems and modules have
shifted the focus from internal optimisation to external relationships. There is now
functionality for global on-demand access to operational data, enabling external
collaboration, data sharing and additional transaction ability through expansions into
functionality such as customer relationship management, supplier relationship
management, built-in-portals and collaborative tools for joint planning (APICS, 2007).
What is included in an ERP system is continuously changing as ERP vendors buy
best-of-breed vendors to add functionality. Forslund (2010) evaluated how ERP systems
supported the demands from supply chain PM and found that most contemporary ERP
systems support supply chain PM well. One of the conclusions of that study was that
coming research could focus less on ERP systems as obstacles for supply chain PM and
more on how the systems actually are applied.
The ability for the ERP system to support supply chain PM issues seems to be affected
in different phases of their lifecycle; when the ERP systems are selected, implemented and
used. The overall question approached in this paper is how the ERP system in its lifecycle
phases affects supply chain PM. Are supply chain PM issues included in demand
specifications of new ERP systems? Are the ERP systems evaluated based on their ability
to support supply chain PM? Are the users educated in how to apply supply chain PM in
an appropriate way? In which of the ERP system lifecycle phases and with which
decisions are supply chain PM issues affected the most? Implementing ERP support for
supply chain PM should be an issue for most companies. Manufacturers typically use
more ERP modules than service companies, which makes the implementation process
more complex and challenging (Snider et al., 2009). The study hence focuses on
manufacturing companies.
 In order to generate propositions about how to select, implement and use ERP ERP systems
systems for supply chain PM, this paper aims to explore how supply chain PM is for supply
affected by the decisions made in the different ERP lifecycle phases. Evaluating ERP
systems is a complex assignment, which can be referred to as multi-criteria decision chain PM
making (Karsak and Özogul, 2009). This paper has a focus on that part of the ERP
systems that handle the PM process; no complete evaluation of the ERP systems is
hence done. The paper is organized as follows; a literature review is conducted, 1161
building up a description model. After the methodology section, four case companies
are described and analyzed. The discussion is generating propositions on how
decisions in the ERP system lifecycle affect supply chain PM. Conclusions and further
research are finally presented.

Literature review
The literature review is structured in two sections. The first section studies the demands
from supply chain PM on ERP systems. The second section makes an overview of ERP
system implementation phases. The two sections form the description model of the
paper.

Demand from supply chain PM on ERP systems

A supply chain PM system will work when the partners have agreed on a measurement
approach or process (Brewer and Speh, 2001; Busi and Bititci, 2006; APICS, 2007).
Supply chain PM can be seen as a process consisting of five activities: selecting
performance variables, defining metrics, setting targets, measuring and analyzing
(Forslund and Jonsson, 2007). A systematic overview of the demand from supply chain
PM on ERP systems was provided by Forslund (2010). In the selecting performance
variables section the ERP systems should offer a good availability of metrics. In the
defining metrics activity, it was found that the ERP systems, in order to support supply
chain PM, should enable detailed definitions of metrics, enable differentiated definitions
and have availability of standard metrics. The defining metrics activity was found to be
well supported in most ERP studied systems, except for the availability of standard
metrics (Forslund, 2010).
In the setting targets activity, the ERP system must enable differentiated target setting.
Only about the half of the studied ERP systems was found to handle the target setting
activity at all, while the rest had no support for target setting (Forslund, 2010). In
measuring, the ERP systems should support automatic identification and data capture
(AIDC) of measurement data, support inbound electronic data transfer (EDT) and generate
differentiated measurement results. All studied ERP systems supported all issues in
measuring (Forslund, 2010). In the analyzing activity, demand for the ERP systems to
create efficient measurement reports, to support outbound report EDT and to enable
efficient analyses were found (Forslund, 2010). Many of the studied ERP systems had
lacking capabilities for analyzing (Forslund, 2010). Demand from the four activities of
supply chain PM on ERP systems are concluded in Table I.

ERP system lifecycle phases

This section reviews the literature for models describing the phases in the ERP systems’
lifecycle. Under similar names, several authors have presented models, consisting of
three or four phases. An overall structure is to distinguish between pre-implementation,
IMDS implementation and post-implementation phases (Loh and Koh, 2004; Velcu, 2007;
110,8 Snider et al., 2009). In this paper, a model with three phases named selection,
implementation and use is built up.
The selection phase includes activities for problem identification, requirements
specification, evaluation of options and selection of system (Hedman, 2003; Bozarth, 2006).
Loh and Koh (2004) included preparation, analysis and design in this phase. Muscatello
1162 et al. (2003) studied ERP implementation and reported that all studied companies
performed some kind of need assessment, by including question such as logistics and PM
issues. Differences were, however, found concerning how systematically this was done.
The more systematic companies were found to have a better basis for configurating the
ERP system after their operations and organizations (Muscatello et al., 2003). Demand
specifications are often technically detailed but seldom describe how the ERP system is
expected to affect the operations and business (ComputerSweden, 2007). Carefully
selecting the ERP system was found to be a critical success factor for ERP implementation
by Helo et al. (2008) and Dezdar and Sulaiman (2009). An overall decision can be to choose
between a best-of-breed system – which provides the best system available for each
specific function – and an ERP system (De Búrca et al., 2005). Best-of-breed systems in
turn can be purchased or developed in-house. Phusavat et al. (2009) linked the selection of
inappropriate ERP systems to the futility of performance measurement. Verville and
Halingten (2003) stressed the importance of addressing users already in this phase, in order
to bridge to the implementation process. Altogether, we decided to include the activities
demand specification and selection of system in this phase.
The implementation phase typically occurs between software selection and going live
(Loh and Koh, 2004; Snider et al., 2009). Implementation issues have been studied by many
authors who describe a complex phase with large demand for managerial competencies.
Customization of the ERP system refers to how companies deal with gaps between their
needs and what the software provides (Bozarth, 2006), or customer-specific changes
(Botta-Genoulaz et al., 2005) by reprogramming (APICS, 2007). Configuration refers to
activities for evaluation and setting of configuration parameters (Hedman, 2003), done
within the standard system and without reprogramming. Mistakes in configuration can
lead to not functioning systems or systems not supporting the business. These initial
mistakes are difficult to change later, as they, e.g. affect how data is stored in the database
(APICS, 2007). Bozarth (2006) reported a majority of studied companies to bring in key
users after the ERP system already was selected, which lowered stakeholder commitment
to the project. The implementation phase also includes activities such as technical

Selecting
performance
variables Defining metrics Setting targets Measuring Analyzing

The availability Enable detailed Enable Support AIDC of Create efficient

of metrics definitions differentiated measurement data measurement
Enable target setting Support inbound EDT reports
differentiated Generate differentiated Support outbound
Table I. definitions measurement results report EDT
Demand from supply Availability of Enable efficient
chain PM on ERP systems standard metrics analyses
installation, testing and education (Hedman, 2003). We would exclude the technical ERP systems
installation and testing from this study, as it is not expected to influence supply chain PM. for supply
Muscatello et al. (2003) found that the needs assessment conducted during the selection
phase often revealed education needs. Two types of training was applied; fundamental chain PM
ERP system education and technical training in the actual use. Snider et al. (2009)
distinguished between software-specific instruction and general skill-upgrading. User
training and education was found to be a critical success factor by De Búrca et al. (2005), 1163
Helo et al. (2008) and Dezdar and Sulaiman (2009). The implementation phase in this paper
contains the activities customization, configuration and education.
The use phase consists of post-implementation issues after going live (Snider et al.,
2009) or the actual use of the system, such as maintenance, continuous improvement
and upgrades (Hedman, 2003). Loh and Koh (2004) mentioned activities as maintaining
systems, supporting users, upgrading and system extensions. How well ERP systems
contribute to an effective material flow is depending on how they are used and applied
(Botta-Genoulaz et al., 2005; Jonsson and Mattsson, 2008). Satisfied users of information
systems tend to use the systems in a more sophisticated way ( Jonsson and Mattsson,
2008). Companies use few of the functions that exist in the ERP systems (Hedman,
2003), and are doing poorly when it comes to follow-up the effects of the ERP systems,
partly due to that they seldom formulate the business-related expectations they have
on the systems (ComputerSweden, 2007). Maintenance of ERP systems has received
little research attention (Botta-Genoulaz et al., 2005). Maintenance can be interpreted as
the updating of parameters in the ERP system. For simplification reasons we group
maintenance, continuous improvement and upgrading into one activity; maintenance.
Use-training was identified as a key issue in the implementation phase but it should be
as important in the use phase (Yu, 2006). The need for employee training was
illustrated in the case study of Maguire et al. (2010) where only about half of the
employees felt that the new ERP system was easy to use. We hence distinguish
between education, which takes place in the implementation phase, and training, which
takes place in the use phase. The use phase then contains system use, maintenance and
training. The three ERP system lifecycle phases and their activities are shown in
Table II.

Methodology
Since only limited empirical research on supply chain PM and implementing ERP
systems was found, an explorative approach to generate tentative patterns and
illustrations was chosen. In early stages of emerging topics, a case study approach
could be appropriate (Yin, 2003). Case studies can be of different types (Yin, 2003). One
type would be by studying some cases, to want to make a statistical generalization in
order to show some general conclusions. Another type would be to study cases in order
to learn something from those particular cases. Such results could be analytically

Selection Implementation Use

Demand specification Customization System use Table II.

Selection of system Configuration Maintenance ERP system
Education Training lifecycle phases
IMDS generalized to theory, and theory could later be tested by replication (Yin, 2003). This
110,8 study is of the second type. The case studies were conducted to explore and discover
empirically how the decisions made in the ERP system lifecycle phases were perceived
to affect supply chain PM, and to generate related propositions.
A multiple case study approach was selected. In order to handle qualitative research in
a structured way, the steps in the case study was conducted following the principles of Yin
1164 (2003). The cases study needed to fulfil some criteria. They should have implemented a
new ERP system recently enough to recall the selection phase and late enough to be able to
describe the use phase of the ERP system. They should be manufacturing companies,
as manufacturers typically use more ERP modules than service companies, which makes
the implementation process more complex and challenging (Snider et al., 2009). They
should represent different company sizes. Four companies, two small, one medium sized
and one large company were found. They should furthermore be willing to participate in
the study. Often more than one respondent per case were needed to get information both on
supply chain PM issues and ERP system implementation. Such an approach, to use
multiple sources of evidence, strengthens the construct validity of the study (Yin, 2003).
Personal interviews, conducted by both researchers, were conducted during 2009
(Table III). Case companies A-C have implemented ERP systems with few customizations
for supply chain PM, while case Company D has implemented an in-house developed
best-of-breed solution for supply chain PM.
The respondents were perceived to be experienced in supply chain PM issues and
showed understanding for the questions. The clear link between the purpose, the
theoretical framework, via the description model to the empirical data collection tool
(a semi-structured interview guide with open-ended questions), further strengthened the
construct validity of the study (Yin, 2003). The interviews were followed up by additional
telephone interviews and e-mail contacts. Cross-case comparisons and pattern matching
(Yin, 2003) were used as analysis methods. The respondents, or key informants, validated
their own case descriptions first and the final paper second. Both these validation
possibilities lead to minor justifications. The reliability of the study was increased by
clearly documenting the different decisions, approaches and questions during the writing
process, and by the fact that both researchers participated in and took notes during the
interviews, as recommended by Yin (2003). The limitations of methodology and results
are further discussed in the conclusions section.

Company Respondents Data collection

A. Wood Managing director/IT responsible Personal interviews, completing

manufacturer e-mail
B. Hydraulic Purchasing manager, quality Personal interviews, completing
manufacturer manager, production planner/IT e-mail
responsible
C. Welded steel Purchaser, IT manager Personal interviews, telephone
Table III. manufacturer interview, completing e-mail
Studied companies and D. Automotive Project manager material planning Personal interviews, completing
applied data collection manufacturer and logistics e-mail
Case descriptions ERP systems
Company A for supply
Company A is a manufacturer of wooden products with 30 employees and a turnover of
5 MEuro. Few suppliers deliver the main raw material (wood) once or maybe twice a year. chain PM
This is the logic in the industry which forces Company A to carry large raw material
inventories. It implies that measuring on-time delivery from suppliers makes no sense.
Company A has a couple of hundreds of domestic and international customers, mainly 1165
retailers. Their customers have demands on short lead times and have in many cases a
98 per cent contracted on-time delivery performance. As the wholesalers have disappeared
from the supply chain, Company A also has to carry finished goods inventories. This has
implied very high on-time delivery performance levels to customers. No customer has ever
complained about the on-time delivery of Company A, therefore, they do not report it
currently other than as averages per year. Due to company growth and lack of resources,
they have not prioritized supply chain PM such as more frequent measurement of on-time
delivery. The focus has rather moved to PM concerning inventory levels and tied-up
capital in raw material, work-in-process and finished goods inventories. When the
new ERP system was acquired, an important aspect was that Company A would be able
to develop and grow within the selected system, also when it comes to supply chain PM.
The configuration possibilities were especially important. The case description of
Company A is shown in Table IV.

Company B
Company B is a manufacturer of customized hydraulic cylinders for many customers in
the energy and maritime industry. In 2008, it had 80 employees and a turnover of
12 MEuro. The main PM use of their ERP system is to measure on-time delivery
performance from their suppliers (Table V). Out of the PM activities, no defining metrics
specifications were done in the selection phase; instead, differentiated definitions were
configured and are continuously updated during use. Target setting were not either
handled in specifications, which implied that no target setting possibilities exist in the
selected system. Targets are hence handled outside the ERP system in Excel. Measuring is
built upon manual data capturing, where a lot of effort is put on education and reminding
of timely and accurate data capturing and registration. The generation of differentiated
measurement results has been important. Analysis was not either mentioned in the
demand specification. This has resulted in manual report “finishing” in Excel.

Company C
Company C produces molded and welded steel products for mainly automotive customers.
In 2008, it had 200 employees and had a turnover of 38 MEuro. The company uses an ERP
system and the PM focus is on on-time delivery measurement of their suppliers (Table VI).
Out of the PM activities, no defining metrics specifications were done in the selection
phase. That was not found to be problematic as instead, differentiated metrics definitions
were configured. However, they are seldom updated. Target setting was not either
handled in specifications. As target setting could not be handled in the selected ERP
system, this is done in Excel. Measuring is built upon manual data capturing and
differentiated measurement results. Even if reporting possibilities were mentioned in
demand specification, it has resulted in the reports from the ERP system are manually
“finished” in Powerpoint.
 110,8
IMDS

1166

Table IV.

from supply chain

PM – Company A
phases and demand
ERP system lifecycle
PM activities Implementation phases Selection Implementation Use

Demand from supply Demand Customization System use

chain PM specification Configuration Maintenance
Selection Education Training
All activities A detailed and long-term demand Education in system use Upgrading of the ERP system every
specification during implementation second year
Started with nine ERP systems, only Training currently when needed
one fulfiled the demands
Selecting The availability of metrics Inventory levels and tied-up capital Measuring more metrics is a long-
performance On-time delivery towards customers term goal
variables
Defining metrics Enable detailed definitions A demand to ensure development Some configuration of No maintenance of definitions
Enable differentiated possibilities parameters was done to
definitions define metrics
Availability of standard
metrics
Setting targets Enable differentiated Not a demand Updating targets for
target setting inventory levels
Measuring Support AIDC of Was a demand Customization of data Reminding of data capturing and
measurement data Was a demand capturing was done measuring discipline, especially for
Support inbound EDT Was a demand newly employed
Generate differentiated
measurement results
Analyzing Create efficient measurement Was a demand (that was not Customization of reports Weekly analysis of inventory levels
reports completely fulfiled) and tied up capital
Support outbound No, internal reports in focus
report EDT Was a demand
Enable efficient analyses
PM activities Implementation phases Selection Implementation Use

Demand from supply Demand specification Customization System use

chain PM
All activities
Selecting The availability of metrics
performance
variables
Defining metrics Enable detailed definitions
Enable differentiated
definitions
Availability of
standard metrics
Setting targets Enable differentiated target
setting
Measuring Support AIDC of
measurement data
Support inbound EDT
Generate differentiated
measurement results
Analyzing Create efficient
measurement reports
Support outbound
report EDT
Enable efficient analyses
Selection
No written demand specification No customization related to
Two ERP systems were
evaluated, selection based on
references
On-time delivery from suppliers
in focus
Not a demand
Not a demand
The previous ERP system had no
measurement possibilities
The previous ERP had no report
possibilities
Configuration
Education
PM
Education of personnel
during implementation
Configuration of parameters
Configuration of
differentiated definitions
Maintenance
Training
Continuous upgrading of the
ERP system
Training annually
Updating of metrics parameters
Targets are added in Excel
Reminding and routine
descriptions of data capturing
An important part of analysis
Targets and graphs are added
in Excel
Trend analysis, causes
for supply
ERP systems

from supply chain

ERP system lifecycle
Table V.

phases and demand

1167
chain PM

PM – Company B
 110,8
IMDS

1168

Table VI.

PM – Company C
from supply chain
phases and demand
ERP system lifecycle
PM activities Implementation phases Selection Implementation Use

Demand from supply Demand specification Customization System use

chain PM
All activities
Selecting The availability of metrics
performance
variables
Defining metrics Enable detailed definitions
Enable differentiated
definitions
Availability of standard
metrics
Setting targets Enable differentiated
target setting
Measuring Support AIDC of
measurement data
Support inbound EDT
Generate differentiated
measurement results
Analyzing Create efficient
measurement reports
Support outbound
report EDT
Enable efficient analyses
Selection Configuration Maintenance
Education Training
Four systems were evaluated by No customization related Continuous upgrading of the
integration, development to PM ERP system
possibilities, standard functions Education during Training
implementation
On-time delivery from suppliers
Not a demand Configuration of metrics Infrequent updating
parameters of parameters
Configuration of
differentiated definitions
Not a demand General targets are applied
(in Excel)
Barcode for internal data capturing Plan to use barcode also
Demand on statistics for PM
Powerful report generator Reports are finished in Excel
and Powerpoint
Deviations from targets,
trend analysis
Company D ERP systems
Company D is an automotive manufacturer. In 2008, it had about 3,000 employees. It has for supply
implemented an in-house developed best-of-breed system for PM (Table VII) of the
about 1,000 suppliers of material to five factories. The company focuses on on-time chain PM
delivery measurement from suppliers. The selection phase was very detailed.
The company spent lots of effort on identifying what functionality it needed and what
was required to achieve it. No lacking functionality was identified during the later 1169
phases, but several programming errors led to continuous updating of the system and
there was a continuous need of education and training. They use an internally
standardized definition and have chosen not to differentiate the definition for different
suppliers. Suppliers have access to the system and all formal PM communication is
conducted through the system. All PM activities and demands outlined in the literature
review can be conducted in the system. Deviations are either due to individual material
planners’ not following the internal standards or not having appropriate education on
the system.

Propositions on improving supply chain PM in the ERP system lifecycle

phases
The purpose of this paper is to explore how supply chain PM is affected by the
decisions made in the ERP system lifecycle phases. Based on the literature review and
the empirical study of four case companies, we have discovered and can motivate the
following propositions on decisions and issues to consider in the ERP system lifecycle
phases, in order to improve supply chain PM. The explorative approach and
the case-based methodology imply that the generation of propositions is a first step
towards new knowledge on how supply chain PM can be improved by decisions in the
ERP system lifecycle phases.

Selection phase
Company A made a thorough demand specification, but uses the ERP system mainly for
company-internal PM of inventory levels. This implies that many of the demands on ERP
systems on supply chain PM are not challenged. Neither Company B nor C included much
PM-specific issues in the demand specifications for the ERP selections, which has been
highlighted as one of the most critical implementation activities (Muscatello et al., 2003;
Helo et al., 2008; Dezdar and Sulaiman, 2009; Phusavat et al., 2009). However, some general
demands on the ERP systems were also valid for PM. The fact that Companies B and C
omitted target setting and report making in their demand specifications has resulted in
the need for additional Excel solutions for target setting and Powerpoint solutions for
generating measurement reports. This supports the results of Forslund (2010), who found
target setting and report making to be the least supported supply chain PM demands in
ERP systems. In Company D the detailed requirement specifications for PM has resulted
in that the entire PM process is supported by the software. The negative effects of not
enough PM consideration in the demand specifications in Companies A-C, may have been
decreased because the users in those smaller companies were deeply involved both in the
selection and implementation phase, supporting the findings of Verville and Halingten
(2003). SMEs tend to have informal structure and culture which increase cross-functional
exchanges (Snider et al., 2009). Both Companies B and C manage to make reports anyway
but it is not perceived to be efficient. The importance of a systematic approach in the
 110,8
IMDS

1170

Table VII.

from supply chain

PM – Company D
phases and demand
In-house system lifecycle
PM activities Implementation phases Selection Implementation Use

Demand from supply chain PM Demand specification Customization System use

All activities
Selecting The availability of metrics
performance
variables
Defining metrics Enable detailed definitions
Enable differentiated
definitions
Availability of
standard metrics
Setting targets Enable differentiated
target setting
Measuring Support AIDC of
measurement data
Support inbound EDT
Generate differentiated
measurement results
Analyzing Create efficient
measurement reports
Support outbound
report EDT
Enable efficient analyses
Selection
In-house developed system
Based on a thorough demand
specification
On-time delivery from suppliers
in focus
One detailed definition
Differentiated definitions are not
demanded
The system allows
for differentiated target setting
EDI from suppliers
Requires some extra work for
generating data from
local systems
Results differentiated for factory
and material planner
Different reports
can be generated
Communication through the
system
Configuration Maintenance
Education Training
The entire system is The software is continuously
customized updated
One standardized definition is
used for all suppliers
Targets are not differentiated
Suppliers and material Suppliers and material planners
planners get education get training
and technical support
Frequent reports automatically
generated
Communication in the software
when deviations
Scorecards analyzed internally
selection phase has been shown in several studies (Muscatello et al., 2003) and this study ERP systems
further emphasizes its importance. We formulate the following propositions for the ERP for supply
system selection phase:
chain PM
P1. Including demand specifications on availability and functionality for target
setting improves supply chain PM.
P2. Including demand specifications on availability and functionality for creating 1171
measurement reports improves supply chain PM.

Implementation phase
No serious problems were generated from the implementation phase in the studied case
companies; Company A made a few customizations while Companies B and C avoided
customization in order to ease frequent upgrading. Company D used a fully customized
solution and continuously realized minor programming errors which needed to be
corrected. Such programming problems are less probable in a standardized ERP system
with few customizations. The more standardized system and usage, the easier it is to get
vendor support and upgrading with new releases. Companies B and C also upgraded
their ERP system more often than Company A. In the implementation phase, all studied
companies were able to define and differentiate their performance metrics, even if this
was not included in the demand specifications. The fact that most ERP systems support
detailed definitions of metrics, directly or by configuration, was found by Forslund
(2010). In all companies, the users have been deeply involved in the implementation
phase and extensive ERP system education has been important in all cases, as suggested
by De Búrca et al. (2005), Helo et al. (2008) and Dezdar and Sulaiman (2009). None of the
companies have, however, focused on education about supply chain PM. Especially,
in Company D, with a much larger amount of users spread out in five factories, there are
some individual material planners who do not use the software as expected. The
intended standardized PM working methods would perhaps have been easier to realize
with more PM education as complement to the system education. Education and
understanding of supply chain PM is important for understanding the importance and
securing standardized working methods, as concluded by Muscatello et al. (2003). SME
companies normally have limited resources for education and training (Loh and
Koh, 2004; Snider et al., 2009), and it is therefore reasonable to believe that education and
training may be especially problematic in SME companies. In the three SME case
companies, supply chain PM education and knowledge was lacking which had a
negative impact on ERP usage. Especially, in Company B, supply chain PM education
may also have resulted in more advanced PM and ERP usage. We formulate the
following propositions for the ERP system implementation phase:
P3. Minimizing PM customizations in order to enable frequent upgrading
improves supply chain PM.
P4. Defining and differentiating metrics by configurations in the implementation
phase improves supply chain PM.
P5. Educating users both in ERP system use and supply chain PM improves
supply chain PM.
IMDS Use phase
110,8 The use phase was found to be important for the outcome of supply chain PM, which
supports the recommendations by Botta-Genoulaz et al. (2005) and Jonsson and
Mattsson (2008). The software functionality for PM is considered to be good in all
cases. All companies do well in training its users in the ERP system, as recommended
by Yu (2006) but they are all lacking in supply chain PM training. User-training has
1172 been identified as important for the perceived ERP user friendliness (De Búrca et al.,
2005; Maguire et al., 2010) and identified as especially lacking in SME companies
(Loh and Koh, 2004; Snider et al., 2009). It is important that the ERP system does not
allow for individual behaviour. However, in Company D, despite all good prerequisites,
there are some users who do not follow the standardized working methods, which
imply a less functioning system and less functioning supply chain PM. In both
Companies A and B, the importance of continuously reminding the users of the
importance of timely data capturing, e.g. by routine descriptions, was stressed.
They had consequently not managed to realize standardized working methods.
In Company C, there were no clear guidelines about how and when to update PM
parameters (e.g. the size of the measurement window) which resulted in very
infrequent parameter updating which the users perceived as negative. This supports
the findings of Jonsson and Mattsson (2008). We formulate the following propositions
for the ERP system use phase:
P6. Training users both in ERP system use and supply chain PM improves
supply chain PM.
P7. Establishing and reminding of standardized working methods improves
supply chain PM.
P8. Frequent updating of PM parameters improves supply chain PM.
We would like to stress the importance of handling the use phase in order to
successfully implement ERP system support for supply chain PM. For all users, no
matter customization level, it seems to be the most important phase for improved
supply chain PM and it is a phase that never ends. The higher the customization level,
the more important is also the selection phase.

ERP system lifecycles and supply chain PM – conclusions and further

research
This paper aimed to explore how supply chain PM is affected by the decisions made in
the different ERP lifecycle phases. By a literature review on four supply chain PM
activities and three ERP system lifecycle phases, together with a multiple case study of
four companies, eight propositions were generated. They propose how decisions made
in the ERP system lifecycle phases can improve supply chain PM. The propositions
remain propositions, until they are tested on a larger population of manufacturing
companies that have implemented ERP systems for supply chain PM. However, the
careful conclusions of this exploratory study are the following: standard ERP systems
contain most PM functionality, why detailed PM demand specifications may not be
necessary for system selection. However, target setting and report generation are PM
activities not always supported by ERP systems; these issues should therefore get
attention especially in the demand specifications. The selection phase is however very ERP systems
important when making decisions about choosing a best-of-breed solution for PM. for supply
There is a trade-off between customization in order to develop an application
supporting existing processes and using a standard system with a minimum of chain PM
customization in order to simplify upgrading and allowing for standardization. When
using an ERP system for supply chain PM, the general guideline should be to minimize
customization. Specialization when it comes to defining and differentiating performance 1173
metrics could often be handled by configurations of the ERP system. ERP system
education and training are often emphasized as one of the most critical issues for
successful ERP system implementation. It should be important for supply chain PM
support as well, but our case analysis shows that education and understanding of why and
how to conduct supply chain PM could be even more important. If not understanding what
and how to do PM, then it is not possible to implement appropriate ERP support. This is
critical in both the implementation and use phases, and most likely especially critical in the
SME companies because resources for education and training are normally lacking in
those companies. Establishing and securing standardized working methods and frequent
updating of parameters were identified as important. Improved training is one of several
means for this.
A number of implications can be related to the study. This study makes a first step
towards a theoretical framework. It contributes to the supply chain PM knowledge by
generating exploratory propositions. A required next step would be to conduct a study
where the propositions are tested on a larger population of manufacturing companies that
have implemented system support for supply chain PM. If the propositions are found valid
also on the larger population, the theoretical implications could be new knowledge on
improved supply chain PM by decision in the ERP system lifecycle phases. According to
Knolmayer et al. (2009) improved supply chain PM should furthermore lead to higher
supply chain performance levels. A practical implication is that the propositions indicate
that a lot of supply chain PM improvements can be realized within the use phase of an
existing ERP system. The selection phase is especially important when choosing highly
customized best-of-bread solutions. The limitations of the study can be that only four
companies are studied; more findings might have been discovered with more cases.

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Further reading
Forslund, H. and Jonsson, P. (2010), “Integrating the performance management process of
on-time delivery with suppliers”, International Journal of Logistics; Research and
Applications, Vol. 3 No. 13, pp. 225-41.

About the authors

Helena Forslund is an Associate Professor of Logistics at Linnaeus University, Sweden. She received
her PhD from Institute of Technology, Linköping University, Sweden. Helena Forslund has
published journal papers like International Journal of Physical Distribution & Logistics Management,
International Journal of Operations & Production Management, Industrial Management & Data
Systems and International Journal of Quality & Reliability Management. Her research interests are in
the area of supply chain management, PM, process management and quality management. She is
also the Director for the Master’s program in Business Process and Supply Chain Management
at Linnaeus University. Helena Forslund is the corresponding author and can be contacted at:
helena.forslund@lnu.se
Patrik Jonsson is a Professor in Operations and Supply Chain Management at Chalmers
University of Technology, and has a PhD degree in Production Management from Lund
University. His research interests relate to demand management, materials management and PM
in supply chains. He has published textbooks and several papers in logistics, operations and
supply chain management journals.

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